Income Volatility and Health

Timothy J. Halliday

No 200729, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: We investigate the impact of exogenous income fluctuations on health using twenty years of data from the Panel Study of Income Dynamics. To unravel the impact of income on health from unobserved heterogeneity and reverse causality, we employ techniques from the literature on the estimation of dynamic panel data models. Contrary to much of the previous literature on health and socio-economic status, we find that, on average, adverse income shocks lead to a deterioration of health. These effects are most pronounced for working-aged men and are dominated by transitions into the very bottom of the earnings distribution. We also provide suggestive evidence of an association between negative income shocks and higher mortality for working-aged men.

Keywords: Gradient; Health; Dynamic Panel Data Models; Recessions (search for similar items in EconPapers)
JEL-codes: I0 I12 J1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea
Date: Written
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Working Paper: Income Volatility and Health (2007)
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